May 03, 2017: TTM Technologies reports Q1 EPS of $0.37 versus the $0.29 estimate. Revenue also beat coming in at $625.2 million versus the $615 million estimate.
The CEO Thomas T. Edman said, “TTM delivered strong organic year on year growth in the first quarter of 7 percent, near the high end of our guidance, and profitability which exceeded our forecast. On a year over year basis, most end markets grew, with the fastest growth coming from the cellular, computing and aerospace and defense end markets. This growth, along with strong operational execution, resulted in non-GAAP EPS above the high end of our guidance. These results represent the highest revenue and EBITDA for a first quarter in the history of the company.”
February 8, 2017: TTM Technologies reports Q4 EPS of $0.58 versus the $0.45 estimate. Revenue also beat coming in at $706.5 million versus the $672 million estimate.
The CEO said, “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular and automotive end markets. This drove substantial operating income leverage in the business resulting in the highest non-GAAP EPS in the history of the company.”
December 12, 2016: Detecting heavy call activity in TTM Technologies, 5000 June $17.5 calls trade at $0.65.
November 30, 2016: Stifel raises price target of TTM Technologies to $15, from $13, and reiterates a Buy rating.
October 30, 2016: JPMorgan raised the price target of TTM Technologies to $16 from $14, and reiterates an Overweight rating.
TTM Technologies, Inc. is a major global PCB manufacturer, focusing on quick-turn and technologically advanced PCBs and the backplane and sub-system assembly business.
February 24, 2017: The best interviews and technology news highlights from the week are brought together in “Best of Bloomberg Technology,” a weekly long-form program, hosted by Bloomberg Technology’s Cory Johnson.
The show talks about Snapchat. My opinion on the Snapchat IPO is that there is no way Snapchat should be valued at $20 billion. Snap’s monetization model is nothing new. Basically Snap tries to get more eyeballs on their software that they can serve ads to. The problem I have with Snap is that it appeals to a younger, more self-centered and immature audience. These are precisely the types of consumers that don’t buy things. With the majority of Snap chat users being below the age of 18, advertisers on Snap chat will quickly realize that while their ads may get clicks, the type of people who click their Snap ads are not actually buying anything.
A weekly Saturday night show that attempts to predict market direction for the week ahead by looking at a variety of technical and fundamental indicators.
This week’s show features Trump’s comments about bringing down drug prices, the incredible trial results from Bellicum Pharmaceuticals that cured all 35 children in the trial, takeover rumors surrounding Depomed, Hooker Furniture crushing earnings and revenue estimates, the candle over candle reversal on Cytosorbents after they received a new reimbursement code from Germany, Volaris candle over candle reversal after they announced a new flight route called Volaris Costa Rica, Calavo Growers candle over candle reversal after receiving a Buy rating from Vertical Group, and more.
A great stock to short for the coming trade war with China is Wal-Mart. Wal-Mart gets many of its products from China and other countries which is why they are known as a “discount” retailer.
A Trump Administration will likely favor American-made goods and place tariffs on foreign-made goods. A Trump Administration could rewrite various trade policies that companies like Wal-Mart have benefited from.
Wal-Mart Stock Chart
Wal-Mart is a powerful corporation with a lot of money and so shorting Wal-Mart stock is something that only advanced technical traders should attempt.
Disclosure: I do not hold any position in any stock mentioned in this article.
There has been heavy insider buying in Gran Tierra Energy that began on November 9, 2016. On November 29, 2016, Director David Smith bought $90,000 worth of stock. Also on November 29, 2016, Susan Mawdsley bought $60,000 worth of stock. Again on November 29, 2016, Officer (VP, Investor Relations) Rodger Trimble bought $37,500 worth of stock.
Gran Tierra Energy Stock Chart
Comments: Nice swing trading chart. Short-term swing target price is $3.08 or higher. The insider buying came after Gran Tierra submitted winning bids totaling a combined $30.4 million for two blocks which Ecopetrol S.A. (“Ecopetrol”), Colombia’s national oil company, offered as part of the Ronda Campos Ecopetrol 2016 (“Bid Round”) in an electronic live auction held on November 25, 2016. Gran Tierra’s winning bids are for the Santana and Nancy-Burdine-Maxine Blocks, which are located in the Putumayo Basin.
Disclosure: I do not hold any position in this stock.
Spark Energy has had heavy insider buying over the last few weeks. The Director Maxwell W Keith III bought $273,564 worth of stock on November 23, 2016. Two days earlier, on November 21, 2016, Vice President and General Counsel Melman Gil bought $14,922 worth of stock.
Spark Energy operates as an independent retail energy services company in the US. It operates through two segments, Retail Natural Gas, and Retail Electricity. The company is involved in the retail distribution of natural gas and electricity to residential, commercial, and industrial customers. As of December 31, 2015, it operated in 66 utility service territories across 16 states and had approximately 328,000 residential customers and 19,000 commercial customers. Description from Finviz.
Spark Energy Stock Chart
Comments: Lots of resistance above the current price. There is 200-day moving average resistance at $26.86 and then 150-day moving average resistance at $28.25. The Twiggs Money Flow is below the 0% line which suggests weakness in the stock.
The stock trades at an excellent forward P/E ratio of 9.7 and has fantastic quarterly revenue growth of 73.2% YoY.
A trade war between the US and China is likely going to start next year with a key promise of Trump to declare China a “currency manipulator” on day one of his Presidency and to enact a 45% tariff on certain Chinese produced products sold in US markets.
China has threatened to retaliate by dumping Boeing and instead ordering from Airbus. China has said it will block sales of US automobiles and iPhones in China and that US soybeans and maize imports will be halted.
To better understand why I think 3D printing stocks are a good play on a trade war with China, we have to go back in history and use macroeconomic analysis to see how we got to where we are today.
China Joins the WTO
In 2001 China joined the World Trade Organization and began flooding America with illegally subsidized exports. Over the next ten years, the US would shut down over 60,000 factories, lose more than 5 million manufacturing jobs and see it’s historical annual rate of GDP growth cut by two-thirds.
Trade Deficits and Offshoring Subtract From GDP Growth
As a result of China joining the WTO, structural problems hit the US, Europe, and other major economies like Japan and South Korea.
If a country like the US runs a trade deficit, this directly subtract’s from its GDP growth. From that observation, you can see what the two most important structure drags on growth for many developed nations like the US have been.
The first has been the drag of the large trade deficits. The second has been the drag on lower domestic investment growth, as multinational corporations like Caterpillar, General Electric, and General Motors, have built more plants in other countries and fewer plants in the US.
Where have most of the offshoring of productions gone? The answer is China.
It’s no accident that the start of America’s era of slow growth in 2001 coincided with China joining the World Trade Organization or WTO, which gave China full access to American markets.
Contrary to the rules of the WTO, China began to flood the US with cheap, often illegally subsidized exports, and over the next decade and a half; the US would see the loss of over 60,000 factories and more than 5,000,000 manufacturing jobs.
The Emergence of Structural Trade Imbalances
During this time the economies of Europe, India, Brazil, among others, would likewise begin to have significant growth-sapping trade deficits with China and this would reduce global growth below what it would otherwise be.
The result would be the structural emergence of a growth-sapping global trade imbalance, as illustrated in the following set of figures.
Here, we see chronic annual trade deficits on the order of 200 to 400 billion dollars annually, with the heavily exported China.
By the year 2012, these deficits would help slow growth dramatically in both Europe and the US, and as a result, China’s two biggest customers would thereby be too weak to sustain China’s export-dependent growth.
In a ripple effect, slow growth in China, in turn, would lead to slower growth in so-called commodity countries like Australia, Brazil, and Canada, whose economies depend heavily on the sale of natural resources like coal, iron ore, and soybeans to China. More broadly, these structural trade relationships would lead to a new type of butterfly effect the world had not yet seen.
Here, we see that weak demand for Chinese exports from Europe and the US leads to weak import demand from China for commodities and other natural resources. In this way, chronic trade imbalances between China and other countries around the world would make it very difficult for a robust, global economic recovery.
Why Keynesian Stimulus Failed
From this butterfly effect, you can see why expansionary, Keynesian fiscal and monetary stimulus in the US and Europe, did not have the full effects anticipated. Indeed, this short-run Keynesian approach did nothing to address the underlying, chronic, long-term structural trade imbalances, acting as a drag on both the U.S. and European economies and by extension, much of the rest of the world.
3D Printing and China Manufacturing
China is rapidly losing ground to 3D printing technology. The business model of it being cheaper to manufacture goods in China could come to an end over the next ten years.
US companies will soon be able to make most things in small 3D printer factories right in your neighborhood or town. Factories, as we know them today, will get broken up and made smaller and local. Newsweek writes…
In the distributed manufacturing scenario, the carbon footprint, so to speak, of each shoe drops precipitously. Asian manufacturing is toast, probably upsetting the global balance of power. And factory jobs—well, they’re likely never coming “back.” 3-D printing automates a lot of what factory workers would’ve done. The hope is that distributed manufacturing creates a whole new set of opportunities for middle-class workers and keeps money local instead of funneling it overseas.
Coming Trade War With China
A Trump Administration will be placing tariffs on Chinese-produced goods effectively penalizing US corporations that manufacture products in China. China will retaliate by blocking the sale of US goods inside of China.
This trade war with China will only speed up the adoption of cheaper and faster 3D printing facilities inside the US IMO.
Many US businesses could increase their purchases of 3D printing machines as a result of the worsening trade relationship with China as well as the public outcry over the loss of millions of US jobs to China.
The earnings recession which began in Q1 2015 prevented businesses from buying 3D printers as consumer demand was uncertain. This last quarter we saw an end to the earnings recession, and if corporate earnings continue to rise, we could see more companies buying 3D printers.
Big Players and Big Money Flowing Into 3D Printing Technology
In May of 2016, the 2D printing giant HP revealed that it has been spending billions of dollars developing 3D printing technology and announced the release of its Jet Fusion 3D 3200 and 4200 printers. The more powerful 4200 was slated to begin shipping in the fall of 2016, while the 3200 will be available in 2017. HP claims these polymer 3D printers are up to 10 times as fast and twice as cost-efficient as current 3D printers powered by the leading technologies. HP sees the incredible future for 3D printing and aims to become the leading 3D printing company.
3D Printing Stock Chart
Chart Comments: Not a great looking chart. Twiggs Money Flow is rising but still below the 0% line. The 50-day moving average (blue line) at $15.21 is currently being tested, and a breakout above this level would be bullish.
Stratasys Stock Chart
Chart Comments: Stratasys’ chart looks even worse than DDD. The Twiggs Money Flow is rising nicely, but it is still below the 0% line.
HP Inc Stock Chart
Chart Comments: Twiggs Money Flow falls below 0% line after missing on revenue; however, overall, the strongest looking chart of the 3D printing stocks. Fantastic valuation at P/E 9.9 and forward P/E 9.2. Wait for candle over candle bounce before taking a long entry.
Disclosure: I do not hold any stocks mentioned in this article.
Franklin Financial Network provides various banking and related financial services to small businesses, corporate entities, local governments, and individuals.
Franklin Financial Stock Chart
Chart Comments: Testing previous resistance at around $38. Inverted hammer with long upper shadow is bearish and may indicate a pullback is coming. Wait for close above $38 before long entry. Twiggs Money Flow is pulling back a little but still above 0% line. Watch where next low on Twiggs Money Flow forms, bullish if following low forms above 0% line. Big insider buying on November 21, 2016, this is the first insider buying since May of 2015. Excellent revenue and earnings growth. Attractive valuation of P/E 16.7 and forward P/E 13.4. Piper Jaffray just began coverage on November 22, 2016, with an Outperform rating.
Disclosure: I do not hold any position in this stock.
Stocks that have a positive divergence between the Twiggs Money Flow and price. Today’s stocks include DAR, GME, MMS, OPHT, PEIX.
Darling Ingredients Stock Chart
Comments: BlackRock, EMINENCE CAPITAL, and SOUTHERNSUN ASSET MANAGEMENT have been accumulators of DAR during 2016. Solid valuation at P/E 16.4, and forward P/E 19.6. Huge buy side volume on 11/23/16, more than 500% higher volume than the average volume.
GameStop Stock Chart
Comments: Awesome valuation P/E 6.8, forward P/E 6.7. Lower taxes and an increase in consumer discretionary income will result in better demand for video games. Still, I like this for a short term swing trade to 200-day MA resistance at $28.44.
MAXIMUS Stock Chart
Comments: Wall Street is expecting 54% YoY EPS growth for Maximus. Maximus has cleared all its moving average resistance levels. My concern with this stock would be its exposure to the Affordable Care Act and how much changes from a Trump Administration would impact earnings and profits.
Ophthotech Corporation Stock Chart
Comments: Rising Twiggs Money Flow but still below 0% line. Somebody is buying this biotech stock.
Pacific Ethanol Stock Chart
Comments: Boom! Beautiful revenue growth over the last four years.
Disclosure: I do not have any positions in any stocks mentioned.